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It’s Brilliance or Nothing for The Creative Counsel Co-Founders

The Creative Counsel is a wild ride. It’s certainly not for the faint-hearted. And co-founders Gil Oved and Ran Neu-Ner have radically changed one of the oldest and most traditional industries in modern business.

Nadine Todd

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Vital Stats

  • Players: Gil Oved and Ran Neu-Ner
  • Company: The Creative Counsel
  • Group: 8 companies
  • Employees: 1 100 permanent, and 1 000s more on a casual basis for activations
  • How they started: TCC Activations, the founding business, is the biggest below-the-line marketing agency in South Africa
  • What they do: TCC finds ways to help its clients get products into stores and onto shelves, and then get those client brands off shelves and into consumer hearts, minds and homes.
  • Turnover: R700+ million
  • Visit: www.creativecounsel.co.za

If there are two things Ran Neu-Ner and Gil Oved are sure of, it’s that an unrelenting focus on brilliance pays off, and that successful businesses are built on great people.

The problem is that they operate a company driven by excellence, and that comes at a cost: High staff turnover and burnouts.

Related: The Creative Counsel: Ran Neu-Ner and Gil Oved

Their interview style is tough, almost combative, because they know that their industry, and particularly their company, is most people’s ‘not’ cup of tea. But those who do suit the culture find a fit in a R700+ million company that actively promotes personal and business development, will give you as much responsibility as you can take on, and will handsomely reward you.

A fly on the wall of a Creative Counsel job interview would think that co-founders Ran Neu-Ner and Gil Oved don’t want to hire new people. It’s a combative environment. The tension is palpable. Zoom in to the candidate in the hot seat. They’re sweating bullets. They gulp. The questions are flying thick and fast, why, why, why.

No answer is good enough. It’s followed quickly by another why. There’s no time to pull up rehearsed answers. The interviewers are getting to the heart of the candidate – who they are, what they value, and what their work ethic really is.

If the candidate makes it through the interview in one piece, and comes back for more, then maybe, just maybe, they have what it takes to thrive at TCC. But Neu-Ner and Oved aren’t going to make it easy. The word ‘easy’ isn’t in their vocabulary.

Starting with the end in mindGil-Oved-creative-counsel

The Creative Counsel’s exceptional results over the last 15 years have been driven by a relentless focus on six key, non-negotiable pillars, all of which are centred on how well their employees deliver on TCC’s mandate.

Finding the right people is an essential first step to this process, and it starts with the company’s very first engagement with each employee: The interview.

“For years we had issues around high staff turnover. We realised that the problem started in the interview process. We were hiring the wrong people who didn’t suit our culture, and they would quickly burn out, or challenge our expectations. We realised that 80% of the success of a hire is culture. We just needed to find a way to test culture, as most candidates will tell you what they think you want to hear in an interview.

“Natie Kirsh used to recommend going for a drive. He said that if you sit in the passenger seat and just chat, asking any questions that come to mind, the candidate will soon reveal themselves in the simplest ways. You’ll see the person, and you can make a judgement call on whether they suit the requirements of the position and the company.

“For us, we focus on leading questions. For example, you’re driving to an interview and you’re five minutes late. The robot in front of you goes from green, to orange, to red. What do you do? You’ve just missed orange. How they answer this reveals a lot about their personality.

“We also love the questioning method of four-year olds. Whatever the answer to a specific question is, follow it with a ‘why’. At the beginning it’s not even about the answer. Candidates will always arrive at an interview with certain rehearsed answers. If you keep asking why, eventually they have to start giving you completely unrehearsed, unplanned answers, and that’s when you’ll get a real sense of who they are.

“We also believe it’s important to put pressure on the candidate — again, that’s when you see their mettle. We hate the question ‘what’s your worst quality’. The answer is always their best quality disguised as their worst, like ‘I’m a perfectionist’. But if you ask why, they’re suddenly scrambling for an answer.

“We’re known for our tough interviews. In South Africa, we’re too courteous. We take the opposite approach. We love questions they’re not expecting. This business is most people’s ‘not’ cup of tea. We almost try to convince you not to join us. If you come back after that, you’ll handle the pressure, and we can give you the support and environment to really fly.”

Related: Gil Oved’s Lessons Learnt: Be The Grandmaster of Your Game

“Our culture is immersive, all encompassing. We want to be a part of your life. We’re proud of our business and the brands we promote. Our teams need to feel that way too.”

Building teams to win

TCC’s team is built on a simple analogy. There are 11 football players on the field, but hundreds tried out for those positions. Only the best make the cut, but they’re also the 11 that are willing to do anything to win. They’ll bleed for their team. That’s a winning culture, and it’s vital if you want to be the best.

The six pillars give the team a framework to work within and follow.

“All six of these pillars are natural to our personalities (well, five of them are, one’s just smart business). They’re the result of us articulating why we believe we’ve been a success, and then finding a way to instil those traits and beliefs into the organisation as a whole.”

Brilliance or nothingran-neu-ner-creative-counsel

“Don’t accept anything less than brilliant. This isn’t about hard work. It’s about output. We’re a top agency in a difficult field. If you’re a member of our team, you need to play at your best. It’s a demanding statement because there are no degrees or gradients. It’s either brilliant, or it isn’t. 100 or 0.

“There are consequences to this – cause and effect. It comes at a cost: Burning people out and high staff turnover; it’s not natural for people to perform at this level 24/7/365. We understand that, and if you do, you will be supported and rewarded. But if you don’t, you don’t belong here.”

 

Win by a mile

“When we present, clients ask for one concept. We give them three. That’s the way we approach everything. We literally want to leave our competitors so far behind we can’t even see them. We always say that if you’re going to go into a fist fight, take a grenade. We’re also proponents of the virtues of constructive paranoia: Never underestimate what your competitors are doing.

“It’s a sign of the times that we’re the number one agency in South Africa in terms of staff size and EBIT, and yet we’re also an unconventional, non-traditional agency. It shows how things are changing, and how quickly.

“Everything’s moving at an incredibly fast pace: New thing, new thing, new thing, and if you want to stay ahead of the curve, you need to be leading those new things, not following. It’s fatiguing, but so important.

“This is so engrained in us though. We, Ran and Gil, are the two biggest competitors here, and that drives us. We’ve always sat next to each other, competing. We were so busy competing against each other that we left our competitors behind.”

Grow those who grow our business

“Suppliers, partners, staff – we proactively assist and find ways to grow people and their businesses. We’ve never done this according to brief.

“We don’t make our staff climb the corporate ladder just because. If they shine, we bounce them, whether they’re 27 years old or 47 years old. This isn’t about experience – it’s about skill, competency and hunger. If you’re a maverick who wants responsibility, we’ll give it to you.

“In an industry notorious for retrenchments based on contracts being won and lost, we’ve also never retrenched staff – not in 14 years. We’ve fired people, but we’ve never retrenched anyone. We’re a large employer, and we’re proud of that. We create employment, and if you give your heart and soul to the business, you’ve got guaranteed employment.

“This same focus on growth extends to our suppliers as well. We pay very quickly. We don’t generally ask for credit terms. We know that if we get them their cash quickly, it makes a huge difference to their business. Guys know we care about their companies. We love that they’re making profits from us as well. That’s what grows their business. As a result they’re fair to us too – they don’t rip us off. And most importantly, when we really need them, when we have to deliver something quickly, they’ll bend over backwards for us.”

Healthy heated debatecreative-counsel-office

“The rule is simple: You can challenge anyone, at any time, but you must play the ball, not the man. It’s not allowed to get personal. So we can say to each other, what you’ve said is idiotic. But we can’t call each other idiots.

“We really believe in a sense of competition, and healthy, heated debate is part of this. It’s bred into our backgrounds. You respect your parents, but if you disagree with something they’ve said or decreed, that’s where the negotiation begins. You need to find the angle to get your way.

“Both of our offices have one glass wall that faces the rest of the floor. We’ve created an egalitarian workspace that strips down hierarchies. We’re completely open plan, and even though we do have offices (and wish we didn’t), we’ve kept them as transparent as possible. Everyone can see what we’re doing, at all times. But this means everyone can see us fight as well. We always laugh at newbies to the company.

“Within their first week, at some point, one of us will be in the other’s office and we’re shouting at each other. What follows is the invariable wide-eyed question to their manager: Is the business closing down? The reply is always, nope, that’s just Ran and Gil. And so their induction to healthy, heated debate begins.

“We really believe that the more and harder you debate something, the better. You chip the block away from all angles, and you’ll find the best answer and a better result.

“As business partners, we might not always agree with each other, but we’ve always had the same intent: What’s best for the business? Logic will prevail. Yes, we also have egos, but we always know that if logic prevails, the best decisions are made for the good of the business — but we also approach each debate with an attitude of ‘you better really convince me I’m wrong.’

“And this filters down to the whole company, from managers to new employees. Anyone can challenge anyone, as long as it’s not personal and logic prevails.

Related: Advice: 2 Minutes with SA’s Top Entrepreneurs

“We end up with juniors who think they have a right to challenge us – and they do. If Ran tells a junior copywriter his idea is bad, he can (and will) fight for it. On one memorable occasion, a junior copywriter actually came back six times to defend his idea, until he finally won the debate. Logic prevailed and he proved to Ran that he was right. In front of everybody – this didn’t happen quietly behind a closed door.

“This is so engrained in the company and our culture, that negativity and personal attacks are nipped in the bud – and we don’t need to do it, the staff do it. They approach someone who is getting personal and call them out on it. That’s not the way things are done here. When a culture is properly engrained and supported, employees themselves will maintain and defend it.”

Colleagues first; everything and everyone comes after

“This is the only one that didn’t come to us naturally. Clients come first, that’s always been our motto. So much so that in our start-up days Gil was called our ‘doctor on call’. It didn’t matter what he was doing, if his phone rang he’d answer the call and see to the client. Nothing was more important.

“As we grew though, we realised that it wasn’t just the two of us anymore, and you can’t deliver to clients without a happy family. That’s why this pillar is so important.

“If you walk out of a meeting and have two calls, and one’s a client and the other’s a colleague, your first instinct is to call the client first. That’s the wrong response. You don’t know why your colleague is calling. It could be to warn you about something related to the client.

It could be because they have three clients waiting on an answer or input only you can provide. Family must come first.

“It’s also important for everyone on the team to know that their managers, colleagues and us have their back. Once you know that you’re supported, you’re more likely to make key decisions on your feet, and those are generally the decisions that drive the business forward.

“Of course we try not to lose clients, but the reality is that there’s no real client loyalty. It’s the nature of the industry. You’re always pitching for your next campaign, and the client will choose what’s right for them, not for you. But your team should be here to stay, so care about them and look after them.”

Partner with integrity

“Do everything with integrity. Creating demand, finding a spin, convincing people to spend their cash: This isn’t an industry known for integrity. But we know that money comes and goes, but reputation is forever. That should always be your focus, and the rest will look after itself.”

Getting your growth oncreative-counsel-office-lunch-room

It took Neu-Ner and Oved five years to hit their first R100 million in turnover. It’s an impressive number, and yet they believe it should have happened much quicker.

“At the time, we’d been so busy working in the business that we looked up and we’d hit R100 million. If we knew then what we know now though, that point would have been reached much quicker.

“One of the biggest reasons our early growth was slow was because we needed a five year view, but we only had a one year view. We didn’t trust our own growth plans, and as a result we didn’t have proper systems in place, or the guts to hire the right people for the right jobs. We didn’t believe enough in ourselves and our ‘big’ business.

“We started hitting a proper growth curve when we realised this and changed our attitude. Too many entrepreneurs know that they should hire people better and smarter than them, but they’re scared. They don’t want their position as business owner, leader and largest shareholder invalidated.

“The realisation that as the entrepreneur, you’re the one who takes the risk, who recognises the talent and who brings a winning team together completely validates your position. This is when the tipping point occurs, and also when you can start focusing on real growth strategies.”

Another key point that Neu-Ner and Oved highlight is that entrepreneurs have a tendency to believe that their personal touch is all important – if they aren’t involved in everything, the business won’t succeed. They’re also very conservative about costs. “Eventually, if you’re lucky, and you’ve still managed to build a sustainable, growing enterprise, the business will get too big, and you’ll need to let go.

Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

For us, if we’d let go sooner, we’d be ahead of the curve. We wasted a lot of time and resources thinking small.”

One of their key examples is the finance department: “We’re two born entrepreneurs – neither of us likes systems and processes. Our sales were always faster than the systems we could implement, which has meant our systems are always playing catch-up. Even though we understand this, we still waited far too long before putting a proper finance department in place.

“In terms of job titles – and this is true of pretty much all job titles – the difference in cost to company between a mediocre employee and the best in the market is about 20%. But the difference in output is 100%. Today we know to just pay the money. A good financial director costs about R250 000 per year more than an okay financial director. But the mistakes that the good FD stops you from making can run in the millions. We know that if we’d had that vision years ago, we would have saved millions.”

Turnover vs profit

There are different levels of growth, and they’re often dependent on your company’s lifecycle.

“First, you’re just trying to stay open and pay your bills. You’ll be fine, but you need to maintain growth, which impacts your personal life and health. The next level, which for us happened in 2011, is putting a management structure in place. If you really want to grow, it’s important for this to be a top-class management team.

“This is an area where we had previously made mistakes. You’re trying to do things on the cheap, which results in two things: One, you have poor or incorrect hires, or two, you end up with ‘compression’ managers, where all managers (including us) are performing multiple roles – your role, and the role below you. No one is working exclusively at their pay level, and that impacts the more strategic growth areas of the business.

“During this first period, you’re concentrating on top line growth. This is important. Revenue gives you the confidence to build your business. It allows you to become a player in the market, to scale and to leverage your suppliers (the bigger you are, the more you purchase, the better you are as a client, the more you can negotiate better rates, and so on).

“But with revenue comes a cost of sales as well. All revenue that comes into the business has certain responsibilities tied to it – supplier invoices, salaries, overheads. This is where the next level of growth comes in.

“Efficiencies are where you save money, and this directly impacts the bottom line and your profits. Revenue and efficiencies are not mutually exclusive, but where you are in your lifecycle will dictate which is more important and requires more focus.

“Get revenue first. Once you’ve started growing though, it’s time to focus on efficiencies and EBIT (earnings before interest and tax). If you ignore that, you’ll never make great profits.

“Our analogy is that revenue is the fuel that drives your car. Without fuel your car won’t move, so it’s important. But once you’re on the highway, you can now start worrying about efficiencies – how far can you travel on one tank, where are your efficiencies, where can you save on fuel costs?

“Revenue is important. But, it’s not about turnover; it’s about leftover. From a turnover perspective, we’ve had good, steady growth since we launched. We reached a point where our turnover could no longer double though, and that’s when we started looking seriously at our earnings. In 2014, our earnings doubled.

Related: Surprising Things 5 Entrepreneurs Do in Their Lunch Breaks

“We’ve invested in systems, in managing the business better, and we’ve become a lean, mean operating machine. We watch our costs, and we look for every little efficiency we can find. The results have been phenomenal, and that’s where real future growth and earnings lie.”

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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Entrepreneur Profiles

4 Lessons From The Pivotal Group Founders On Growing And Disrupting All At Once

Here’s how they’ve built what they believe to be the foundations of a successful group of businesses in five years.

Nadine Todd

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paul-hutton-joel-stransky-and-bruce-arnold-of-pivotal-group

Vital stats

  • Company: Pivotal Group
  • Players: Paul Hutton, Joel Stransky and Bruce Arnold
  • What they do:  Pivotal pioneered voice biometrics in the financial and telecommunications market. Over time, the company has grown to include nine divisions across multiple sectors.
  • Launched: 2012
  • Visit: pivotalgroup.co.za

How do you build a disruptive business while also focusing on growth? Disruptive ideas are by definition new and unknown to the market. They defy traditional and established solutions and ways of doing business, and they require the market to be educated before you can really onboard clients or even sell your product or service.

The answer is to build parallel solutions: Business units that bring in revenue while the more disruptive ideas are being developed and introduced to the market. Here are the four top lessons the founders of the Pivotal Group have learnt while building their business and pursuing disruptive opportunities simultaneously.

1. Know who your competitors (and potential competitors) are

Great ideas that are economically viable and solve a need that consumers are willing to pay for are few and far between. Great ideas alone are a dime a dozen, but if you’ve spotted a need, chances are someone else has as well. You then need to step back and critically evaluate why someone else hasn’t done this before; if they have done it and they’ve failed; or if you’re entering shark-infested waters riddled with competitors.

Once you’ve determined there is a gap in the market, you need to evaluate who your potential competitors are, and the impact if they suddenly started offering a similar solution to the market.

For Paul Hutton, Bruce Arnold and Joel Stransky, the founders of OneVault, competition was always a factor, particularly as a start-up, and given that potential competitors included Bytes and Dimension Data, this was a very real factor to consider. After careful analysis, however, the founders decided to go for it. Their differentiator was their business model. They wouldn’t be selling OneVault as a software solution, but as a service.

Related: Which Of These 7 Personality Traits Do You Share With The World’s Richest People?

The idea had taken root while Paul was still CEO of TransUnion Credit Bureau. “I came across voice biometrics in Canada. There’s been a surge in identity fraud around the world, and I really understood the value of voice recognition as a verification tool,” he explains. “It can’t be faked, and it’s the only remote biometrics solution available, because you don’t physically need to be there to verify yourself.”

Paul had presented the idea to Transunion’s global board, and while they were intrigued, nothing came of it. “TransUnion’s model is to buy companies that are experts in their specific fields, not launch a new disruptive division from scratch.”

But this meant there was an opportunity for Paul to pursue the idea independently. Joel (former MD of Altech Netstar and CEO of Hertz SA) and Bruce (formerly Group CFO of TransUnion Africa and CFO at Unitrans Freight) were immediately interested in partnering with Paul. Both wanted to pursue entrepreneurship, although neither could do so immediately. The commitment was enough for Paul to get directly involved and start working on the business while he waited for his partners to join him.

In January 2011, Paul and Joel travelled to the UK and started investigating voice biometric solutions. “Voice biometrics was fairly new, but good technology was available, and there were global leaders in the sector,” says Joel.

It was important to choose the right product for the South African market, as this would form the basis of their offering. A contact at Dimension Data (one of whom became an investor in the business) offered this simple and straightforward advice:

When you’re choosing a technology partner, go with the company whose tech you’re confident in, and whose leadership is stable. You’re basing so much on this company and their longevity, so don’t disregard this criteria.

For Paul, Joel and Bruce, a US-based company, Nuance, ticked those boxes. But, from a competitive perspective, OneVault wasn’t the only potential player in the market. “Neither Bytes nor Dimension Data had gone into voice, but they had the potential to do so,” says Bruce. “The products were available to them through their partners.”

To mitigate this very clear risk, the founders made two critical decisions. “Our intention was to sell voice biometrics as a service, instead of a software solution that customers bought and owned, with the necessary infrastructure to go with it. The idea for OneVault was that there would be one place where your voice print lived, and different businesses could plug into our solution.”

The business model of large technology players in South Africa is to sell integrated software solutions, so OneVault’s business model was a differentiator. The next differentiator Paul, Bruce and Joel focused on was becoming specialists in their field.

“This is Paul’s baby,” says Bruce. “We’ve needed to build up a niche, expert team that specialises in voice biometrics. Because we aren’t generalists, 100% of our focus goes into this, instead of 5% or 10%.”

To attract the best in their fields, the founders needed a very appealing culture and a strong recruitment strategy. “We focused on what we wanted from our work environment, and then applied the same rules across the business,” says Joel. “Our goals were to drink good coffee, have no leave forms — ever; be able to take the time to ride our bikes and watch our kids play sports. If someone can’t make it work, or takes advantage without putting in the work, they come and go, but on the whole, we’ve had extremely low churn, and we’ve attracted — and kept — incredible talent.”

This differentiator would prove to be important for two reasons. First, two and a half years into the business, with investors on board and having pumped a significant amount of their own capital into the business, the team hit a major stumbling block. For a few weeks, they didn’t even know if they had a business.

“We had been operating on one major, and as it turned out, faulty, assumption,” says Paul. “We thought South African companies had the right telephony structure to implement our solution. We’d been building our solution on top of Nuance’s software, and were ready to start piloting the entire system with a few key customers, and we found out that in order to meet global voice biometric standards, the telephone technology had to be G711 compliant. South Africa was operating on G729.”

This was OneVault’s make or break moment. The team had six weeks to come up with a solution that ensured it met the necessary levels of accuracy. Without a highly skilled team this would have been impossible.

Even as a start-up, the strategy had been to only bring the best of the best on board. “We didn’t interview,” says Bruce. “We approached people whom we knew. We approached the best in the industry, and convinced them to take a chance with us. There was risk, but there were also rewards.” One of those people was Bradley Scott, a brilliant engineer whom both Paul and Bruce had worked with at Transunion.

Today, OneVault is one of the most specialist companies in the world, and often asked to speak at events in the US.

Being the niche specialists paid off, and OneVault achieved the almost impossible. But this had its downside.

Once you’ve shown something can be done, the bar of what’s impossible moves. Competitors enter your space.

This was the second reason why being such focused, niche experts paid off. “We demo’d the solution for a large local corporate, they loved it, and then went to a ‘then’ competitor  to implement it,” says Paul.

“We always knew this was a real danger. Players like Bytes and Dimension Data have solid, existing client relationships with the same companies we’re targeting.”

18 months later the project still wasn’t working. “This is deep specialist knowledge,” says Paul. “Knowledge we built while we created our offering.” OneVault won the contract, and developed a partnership with Bytes at the same time. Today, OneVault works with all the major software integrators in the market. “We’re a specialist service they can offer their clients, without needing to put the same time and energy we needed to put in to become the specialists.”

Through a focused strategy, OneVault has become a partner, rather than a competitor, of some of the largest players in the industry.

2. Understand the nature of disruption so that you can prepare for it

pivotal-group

In today’s ever-changing and fast-paced business world, most business experts are in agreement that as a company, you’re either the disruptor, or you’re being disrupted. The problem is that disruption comes with its own set of challenges.

“Our entire business model was built around a subscription service. Instead of a company buying a software solution, installing it and running it internally, we would do all of that. We would carry the infrastructure burden, and the high upfront cost,” says Joel.

In theory, this sounded like a clear win for businesses that would benefit from a voice biometrics solution. The reality is never so simple, particularly when you’re a disruptor.

“The software is expensive, and so we thought this would be seen as an excellent solution,” says Paul. “Instead, we faced a lot of reticence over the cloud. Businesses didn’t trust it yet.”

On top of that, first movers are often faced with a lag in corporate governance guidelines. As technology becomes more sophisticated, so governance guidelines change — but it’s a slow process, and the lag can impede disruptors.

“You also can’t give proper reference cases, because it’s all brand new to your market,” says Paul. “The best we had was a case study of how well it had worked in Turkey.”

To compound matters, proof of revenue is essential for businesses wanting to trade with large corporates, but non-existent in the start-up phase.

So, what’s the solution? According to Joel, Bruce and Paul, it’s all about being patient, never giving up, building gravitas and getting a few clients on board, even if it’s free of charge to build up your reputation and prove your concept. Finally, you need to bring in revenue from more traditional channels to support your disruptive products and solutions.

“Disruptive solutions are by their nature new and different, which means change management for your customers. This makes the sales cycle long and complex, and you have to be prepared for that,” says Bruce.

Don’t stop laying your groundwork. While disruptors are ahead of the curve, you need to be ready for the uptake when it arrives. “We’ve now concluded a partnership with South Africa Fraud Prevention Services,” says Paul. “When an imposter calls we won’t only  terminate the transaction but we will alert the identity being compromised in the attempt and we will actively prevent fraud by contacting Fraud Prevention. The ultimate vision is for every South African’s voice biometric signature to live in our vault, and we are already receiving imposter information.”

3. Cultivate additional revenue streams

So, what do you do while you are living through the extremely long sales turnaround time of your disruptive, game-changing solution? Bills still have to be paid and investment is needed to develop truly disruptive ideas.

First, the team realised that while an annuity subscription service was their ultimate goal and where the industry was heading, initially they needed to be able to sell and implement the software.

It’s worth noting that one of OneVault’s earliest customers who bought the software has since launched a new business, which is on OneVault’s annuity service model. The shift has just taken time. “The change is happening, but it’s been slower than we anticipated,” says Bruce. “We needed to accept that fact and sell the software to bring revenue into the business while we were waiting for the market to catch up.”

It’s an important lesson. You don’t want to get distracted from your vision, but you need to be bringing in revenue, even if that means your short-term strategy differs from your long-term goals.

“It took three years before we really started seeing a move towards hosted solutions,” he adds. “Outsourced and offsite solutions are opex environments, not capex. They are more cost-effective for customers, but they require a shift in thinking. It’s a move away from how things have always been done, and that takes time.”

But, while Paul, Bruce and Joel were learning the art of patience, they also needed to start bringing revenue into the business.

Related: 8 Inspirational Quotes From Movie Mogul Steven Spielberg

“It was clear that we needed to find other opportunities,” says Joel. The result is the Pivotal Group, a diversified holding company with different businesses that are interlinked and complementary.

The group’s first business outside of OneVault, Pivotal Data, was based on a large call centre contract Joel, Paul and Bruce secured. “You can’t be an expert in everything – when you specialise you will always be more successful. The trick is to partner with other experts,” says Joel. In this case, three entrepreneurs were opening a call centre — this was their area of expertise; they were absolute subject matter experts. What they weren’t experts in was technology or facilities management. Instead of doing it themselves, they were looking for partners.

“We manage everything aside from the people element,” explains Joel. “We found and leased a building, built the bespoke workspace, put in the technology, and managed the facility and IT on an opex basis back to them.”

The business immediately had a good anchor client, and Pivotal Data has built on that. The annuity income has supported further growth.

“This was a base for us, but we’ve acquired a few businesses on the back of this success, and created our own cloud contact centre solution — which also feeds into what we’re doing with OneVault,” says Bruce. “Our vision is to create a technology stack that’s world-class and provides a range of services that no other businesses provide as a single solution.”

Because of this pivot into call centre management, a new opportunity has presented itself, and Pivotal’s ambition has grown to include a solution that calls, authenticates, and then analyses all the data that is collected during those calls.

“Through partnerships, my team has developed a predictive analytics system that gives contact centres deep diagnostic tools. We can predict why agents are having the conversations they have, and what to tweak to improve them. We see the agent’s problem before they do. This isn’t just value add, it’s a revenue generating tool if it improves lead conversion rates and customer service. It’s also all geared to lowering call volumes.

“We know we need to keep looking forward. OneVault is starting to gain real traction, but we need to be working on the next disruptive solution and model. We can’t sit back and relax,” says Bruce.

“Three years ago we said that’s it; no more start-ups or investing in pre-adoption phase businesses. From now on, everything we do will be revenue generating,” says Paul. “We’d stretched three years of runway to five years in OneVault, and we didn’t want to keep doing that. We wanted instant revenue businesses. And the very next thing we did was invest in a start-up. It’s a crazy space, but it’s also very rewarding.”

To sustain it, the group continues to grow, focusing on investing in businesses and entrepreneurs who are subject matter experts and therefore already know and understand the market, and then positioning each new business or service to plug into the current offering.

“Data is our golden thread — technology and the disruptive space,” says Joel.

4. Be open to new ideas and opportunities

pivotal-group-south-africa-founders

Integral to the Pivotal Group’s positioning is Paul, Bruce and Joel’s focus on supporting other business owners whose offerings align with the group’s own growth goals, and who would benefit from joining a group.

“If your goal is to be disruptive, you need to be open to all kinds of new ideas,” says Joel. Some will be better than others, and the co-founders have made the decision to focus on the ‘jockey’ rather than the business as a result. Business offerings and ideas need to pivot. If you have the right partners, finding a solution is all part of the challenge.

Pivotal’s move into the world of artificial intelligence is due to one such partnership. “One of our clients approached us with a concept. But he needed a partner to develop it into a proper AI solution,” says Joel.

It’s an augmented intelligence solution that focuses on recruitment, talent management and career guidance. The solution screens, ranks and matches candidates against a job profile, or a number of profiles. It’s a multidisciplinary platform that predicts the performance of the individual in a role.

“Our partner is a former Accenture consultant and a leader in this field. His focus is on the IP and science of the product, ours is on the business component.”

The challenge is how to commercialise and scale the business in as short a time frame as possible. Like many disruptive products, the adoption process is a stumbling block. “We invest at the pre-adoptive curve — not at the revenue generating stage, which means a big focus is always on how we can take an idea and build it into a revenue generating business,” says Bruce.

The business uses capital selectively. “We want to invest in and drive our own agenda,” says Paul. “We’re in charge of our own destiny, but it’s not comfortable or simple. We came from corporate. Big machines that you need to direct and keep on course. This is an entirely different challenge and we are still learning.”

Related: Listen And Learn: Why Podcasts Aren’t Just For Start-up Founders


Listen to the podcast

Matt BrownMatt Brown interviews Paul, Joel and Bruce and discusses what it’s like to invest in pre-adoptive start-ups and staying ahead of the curve.

To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.

The Matt Brown Show is a podcast with a listenership in over 100 countries and is designed to empower entrepreneurs around the world through information sharing.

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Entrepreneur Profiles

Afritorch Digital An Overnight Success That Was Years In The Making

By any standard, local start-up AfriTorch Digital has seen phenomenal growth and traction. But, while the company’s success might seem quick and effortless, there is a lot of hard work behind it.

GG van Rooyen

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michel-m-katuta-and-thabo-mphate-of-afritorch-digital

Vital stats

  • Players: Michel M. Katuta and Thabo Mphate
  • Company: Afritorch Digital
  • Established: 2017
  • Visit: afritorchdigital.com
  • About: Afritorch Digital assists research agencies in conducting market research through its in-depth knowledge of the African continent and its use of the latest digital technologies.

There is a saying that goes: It takes years to become an overnight success. While a company or individual might seem to enjoy sudden (and seemingly effortless) success, there is often more to the story. The results are usually public and well-publicised, but the years of hard work that came before go unnoticed.

Local start-up AfriTorch Digital is a great example of this. Since launching in May 2017, the business has seen excellent growth. “To be honest, we were very surprised by the level of success. Things progressed a lot quicker than we anticipated,” says co-founder Thabo Mphate.

 “All the goals we had hoped to reach in four or sixth months, we managed to hit in the first month. It was just amazing.”

Related: Edward Moshole Founder Of Chem-Fresh Started With R68 And Turned It Into A R25 Million Business

Preparing to launch

While AfriTorch Digital has certainly seen quick growth and success, it would be a mistake to assume that the same is true of the two founders. For them, the creation of AfriTorch was years in the making.

“The goal was always to start our own business,” says Thabo. “I think we’re both entrepreneurs at heart, and we saw an opportunity to create a unique kind of business that offered an innovative solution to clients, but we also realised the value of getting some experience first. Without the knowledge, experience, network and intimate understanding of the industry landscape, getting AfriTorch off the ground would have been incredibly difficult.”

Entrepreneurs tend to dislike working for other people. They want to forge their own path. However, as AfriTorch Digital’s case illustrates, spending time in the industry that you’d like to launch your business in is tremendously useful.

“Finding clients when we launched AfriTorch was relatively easy,” says company co-founder and CEO Michel Katuta. “One reason for this, I think, was that we were offering potential clients a great solution, but the other was that we had established a name for ourselves in the industry. People knew us. We had worked for respected companies, and we had done work for large clients. So, when we launched, we were able to provide a new start-up with credibility in the industry.”

The Lesson: Becoming an entrepreneur doesn’t always start with the launch of a company. Spending time in an established business, gaining experience and making contacts, can be invaluable. Very often, it’s the relationships you build during this time and the knowledge you accumulate that will help make your company a success.

Solving a problem

Everyone knows that launching a successful business means solving a burning problem, but what does that mean in practice? Aren’t all the burning problems already being addressed? And how do you attempt this without any money?

Thabo and Michel identified a small group of potential clients with a burning problem. Crucially, it was a problem that no one outside of the research field could have identified. Having spent years in the trenches, they saw a massive gap waiting to be filled.

Related: AutoTrader South Africa’s George Mienie Knows Disruptive Innovation Is More Than Shifting Gears

“A decade ago, researchers were still debating whether the future of the field was in the digital space. That debate is now over. Everyone agrees that online is the way to go. What once took months now takes days or hours, and the cost of research can be reduced by a factor of five,” says Michel.

“But researchers are not technology specialists. If made available, they are eager to adopt digital tools, but they aren’t eager to develop these tools themselves. That’s not their area of expertise.”

AfriTorch Digital stepped up to provide these tools. Katuta has a background in software engineering, so he could approach research problems with the eye of a tech specialist. Very soon, research agencies were lining up to make use of AfriTorch Digital’s services.

“We work with research agencies that conduct research on behalf of their clients. We provide the digital tools needed to conduct research online, and we provide the online communities. A big reason for our success is that we understand Africa. A lot of companies want to conduct research in Africa, but traditionally, this has been very hard. There was a lack of access and a lack of infrastructure that made research very hit-and-miss. Thanks to the continent’s adoption of mobile technology, it’s now much easier. If you have the technological know-how and an understanding of the environment, you can do amazing things,” says Michel.

The Lesson: Find a niche and own it. Research agencies might not have seemed like an obvious and lucrative market, but having spent time in the industry, the AfriTorch founders were able to identify clients who would be desperate for their offering. Spending time in an industry will help you see where the opportunities lie.


Take note

Before launching a business, get to know an industry from the inside out. This will give you an unparalleled view into gaps you can service.

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Entrepreneur Profiles

Jason English On Growing Prommac’s Turnover Tenfold And Being Mindful Of The ‘Oros Effect’

Rapid growth and expansion can lead to a dilution of the foundational principles that defined your company in its early days. Jason English of Prommac discusses how you can retain your company’s culture and vision while growing quickly.

GG van Rooyen

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Vital stats

  • Player: Jason English
  • Position: CEO
  • Company: Prommac
  • Associations: Young President’s Organisation (YPO)
  • Turnover: R300 million (R1 billion as a group)
  • Visit: prommac.com
  • About: Prommac is a construction services business specialising in commissioning, plant maintenance, plant shutdowns and capital projects. Jason English purchased the majority of the company late in 2012, and currently acts as its CEO. Under his leadership, the company has grown from a small business to an international operation.

Since Jason English purchased Prommac in 2012, the company has experienced phenomenal growth. At the time he took over as owner and CEO, it was a small operation that boasted a turnover below R50 million.

Today, Prommac is part of a diversified group of companies under the CG Holdings umbrella and alone has grown it’s turnover nearly ten fold since Jason English took over. As a group, CG Holdings, of which Jason is a founder, is generating in excess of R1 billion. How has Prommac managed such phenomenal growth? According to Jason, it’s all about company culture… and about protecting your glass of Oros.

Jason English

Related: 5 Top Lessons From LAWTrust To Prepare For Super-Charged Growth

“As your business grows, it suffers from something that I call the Oros Effect. Think of your small start-up as an undiluted glass of Oros. When you’re leading a small company, it really is a product of you. You know everything about the business and you make every decision. The systems, the processes, the culture — these are all a product of your actions and beliefs. As you grow, though, things start to change. With every new person added to the mix, you dilute that glass of Oros.

“That’s not to say that your employees are doing anything wrong, or that they are actively trying to damage the business, but the culture — which was once so clear — becomes hazy. The company loses that singular vision. As the owner, you’re forced to share ‘your Oros’ with an increasing number of people, and by pouring more and more of it into other glasses, it loses the distinctive flavour it once had. By the time you’re at the head of a large international company, you can easily be left with a glass that contains more water than Oros.

“Protecting and nurturing a company’s culture isn’t easy, but it’s worth the effort. Prommac has enjoyed excellent growth, and I ascribe a lot of that success to our company culture. Whenever we’ve spent real time and money on replenishing the Oros, we’ve seen the benefits of it directly afterwards.

“There have been times when we have made the tough decision to slow growth and focus on getting the culture right. Growth is great, of course, but it’s hard to get the culture right when new people are joining the company all the time and you’re scaling aggressively. So, we’ve slowed down at times, but we’ve almost always seen immediate benefits in terms of growth afterwards. We focus heavily on training that deals with things like the systems, processes and culture of the company. We’ve also created a culture and environment that you won’t necessarily associate with engineering and heavy industries. In fact, it has more in common with a Silicon Valley company like Google than your traditional engineering firm.

“Acquisitions can be particularly tricky when it comes to culture and vision. As mentioned, CG Holdings has acquired several companies over the last few years, and when it comes to acquisition, managing the culture is far trickier than it is with normal hiring. When you hire a new employee, you can educate them in the ways and culture of the business. When you acquire an entire company, you import not only a large number of new people, but also an existing organisation with its own culture and vision. Because of this, we’ve created a centralised hub that manages all training and other company activities pertaining to culture. We don’t allow the various companies to do their own thing. That helps to manage the culture as the company grows and expands, since it ensures that everyone’s on the same page.

“Systems and processes need to make sense. One of the key reasons that drove us to create a central platform for training is the belief that systems and processes need to make sense to employees. Everyone should understand the benefits of using a system. If they don’t understand a system or process, they will revert to what they did in the past, especially when you’re talking about an acquired company. You should expect employees to make use of the proper systems and processes, but they need to be properly trained in them first. A lot of companies have great systems, but they aren’t very good at actually implementing them, and the primary reason for this is a lack of training.

“Operations — getting the work done — is seen as the priority, and training is only done if and when a bit of extra time is available. We fell into that trap a year ago. We had enjoyed a lot of growth and momentum, so we didn’t slow down. Eventually, we could see that this huge push, and the consequent lack of focus on the core values of the business, were affecting operations. So, we had to put the hammer down and refocus on systems, processes and culture. Today Prommac is back at the top of it’s game having been awarded the prestigious Service Provider of the year for 2017 by Sasol for both their Secunda and Sasolburg chemical complexes.

Related: Establishing The Wheels Of Change In Business

“If you want to know about the state of your company’s culture, go outside the business. We realised that we needed to ‘pour more Oros into the company’ by asking clients. We use customer surveys to track our own performance and to make sure that the company is in a healthy state. It’s a great way to monitor your organisation, and there are trigger questions that can be asked, which will give you immediate insight into the state of the culture.

prommac

“It’s important, of course, to ask your employees about the state of the business and its culture as well, but you should also ask your customers. Your clients will quickly pick up if something is wrong. The fact of the matter is, internal things like culture can have a dramatic effect on the level of service offered to customers. That’s why it’s so important to spend time on these internal things — they have a direct impact on every aspect of the business.

“Remember that clients understand the value of training. There is always a tension between training and operational requirements, but don’t assume that your clients will automatically be annoyed because you’re sending employees on training. Be open and honest, explain to a client that an employee who regularly services the company will be going on training. Ultimately, the client benefits if you spend time and money on an employee that they regularly deal with.

“For the most part, they will understand and respect your decision. At times, there will be push back, both from clients and from your own managers, but you need to be firm. In the long term, training is win-win for everyone involved. Also, you don’t want a client to become overly dependent on a single employee from your company. What if that employee quits? Training offers a good opportunity to swop out employees, and to ensure that you have a group of individuals who can be assigned to a specific client. We rotate our people to make sure that no single person becomes a knowledge expert on a client’s facility, so when we need to pull someone out of the system for training, it’s not the end of the world.

“Managers will often be your biggest challenge when it comes to training. Early on, we hired a lot of young people we could train from scratch. As we grew and needed more expertise, we started hiring senior employees with experience. When it came to things like systems, processes and culture, we actually had far more issues with some of the senior people.

“Someone with significant experience approaches things with preconceived notions and beliefs, so it can be more difficult to get buy-in from them. Don’t assume that training is only for entry-level employees. You need to focus on your senior people and make sure that they see the value of what you are doing. It doesn’t matter how much Oros you add to the mix if managers keep diluting it.”

Exponential growth

When Jason English purchased Prommac late in 2012, the company had a turnover of less than R50 million. This has grown nearly ten fold in just under five years. How? By focusing on people, culture and training.

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